What You Missed This Week in Video Games

“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.

‘MARVEL RIVALS’: Last week, NetEase (NTES) unveiled a new team-based shooter “Marvel Rivals,” a multiplayer game based on Marvel Comics’ (DIS) superhero characters. The game, which includes popular Marvel heroes including Iron Man, Spider-Man, and the Incredible Hulk, is being developed for PC, with an alpha test for the game set to launch in May 2024.

Following the official announcement, Morgan Stanley analyst Alex Poon noted that NetEase has made repeated attempts in the shooter genre over the past six or seven years, and that the shooter genre is one of the top three game genres in China. The firm, which has an Overweight rating on NetEase, said that the addition of “Marvel Rivals” to the game maker’s pipeline implies share gain potential in another big daily active user genre.

TAKE-TWO/GEARBOX: Take-Two (TTWO) announced that it has entered into a definitive agreement with Embracer Group (THQQF) to acquire The Gearbox Entertainment Company, a creator of entertainment experiences, for $460M. The consideration consists entirely of newly issued shares of Take-Two common stock. The number of Take-Two shares will be calculated by dividing the purchase price by the average closing price per share on Nasdaq during the five trading day period ending on the trading day immediately prior to the closing date. The purchase price assumes a debt-free, cash-free company with a normalized level of net working capital at the time of the closing of the acquisition. The acquisition is anticipated to be completed during the first quarter of Take-Two’s FY25, and is subject to the satisfaction of customary closing conditions, including applicable regulatory approvals. The transaction excludes certain third-party publishing and other assets that Take-Two deemed non-core to its business.

Take-Two will acquire Gearbox’s portfolio of intellectual property, including full ownership of “Borderlands” and “Tiny Tina’s Wonderlands” franchises, as well as “Homeworld”, “Risk of Rain”, “Brothers in Arms”, “Duke Nukem”, and Gearbox’s future pipeline. Gearbox currently has six interactive entertainment projects in various stages of development, including five sequels, two of which are from the Borderlands and Homeworld franchises, and at least one new intellectual property. Beyond these plans, Take-Two believes that there are incremental opportunities to invest in new projects and to expand Gearbox’s proven franchises. Gearbox will operate as a studio within 2K and will be led by Founder and CEO, Randy Pitchford, and his management team. The acquisition adds a robust and proven development team to 2K’s incredibly talented developer community, including personnel that have worked together on multiple critically and commercially successful games. Gearbox operates studios in Frisco, Texas; Montreal, Canada; and Quebec City, Canada.

SEGA NEWS: Sega Sammy (SGAMY) was the focus of a number of gaming news headlines last week. For starters, Polygon reported that Sega of America workers have voted to ratify their first collectively-bargained agreement with the video game company’s U.S. business, allowing for new protections and pay increases for roughly 150 full-time and temporary staff. Employees in the union, known as Allied Employees Guild Improving Sega, won key concessions from the “Sonic the Hedgehog” maker as part of the deal, including base-building raises for all workers, layoff protections, and a pledge to credit people on games they’ve worked on, Polygon noted.

Meanwhile, Sega on Thursday sold Relic Entertainment, a game developer behind the “Company of Heroes” and “Dawn of War” games. In a statement, Relic said that, with an external investor, it will become an independently-run development studio. “We want to thank Sega, whose support over the years and guidance during this transition have been instrumental to our success,” the studio said. “We may be out of the Sega business, but we remain friends and colleagues.”

That same day, Gamesindustry.biz reported that, in addition to selling Relic, Sega intends to slash 240 jobs across Sega Europe, Creative Assembly, and Sega HARDLight. The majority of the layoffs will be across Creative Assembly and Sega Europe, though a “small number” will come from HARDLight.

OTHER STORIES TO WATCH:

• Sony’s (SONY) “Helldivers II” topped Newzoo’s U.S.-U.K. engagement and revenue chart for the month of February, Gamesindustry.biz reports(MSFT) is testing an AI-powered chatbot for Xbox, The Verge reports (read more)
• Nintendo of America (NTDOY) will lay off a number of contractors, Kotaku reports (read more)